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KEC International Ltd
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Ladies and gentlemen, good day, and welcome to KEC International Limited Q1 FY '24 Results Conference Call.
We have with us today from the management Mr. Vimal Kejriwal, Managing Director and CEO; and Mr. Rajeev Agarwal, CFO. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Vimal Kejriwal. Thank you, and over to you, sir.
Thanks, [ Niral ]. Good morning. We welcome you all to the Q1 earnings call of KEC. Let me start with an update on the key developments during the quarter and thereafter talk on the overall financial performance of Q1, along with highlights of the respective businesses.
We continue to deliver a sequential improvement in EBITDA margin quarter-over-quarter. The margin has improved sequentially by 140 basis points in the last 3 quarters from 4.4% to 5.8% and has improved by 70 basis points from 5.1% in Q1 last year to 5.8% this quarter. In SAE, I'm pleased to share that we have successfully revived the business by delivering a positive PBT for the quarter. We continue to refinance the high-cost loans in tranches and are on track to refinance the balance loans. The business continues to witness a sustained flow of orders from Americas with YTD order intake of over INR 350 crores, a healthy growth of 65% Y-on-Y. With this book and L1 in SAE stands at over INR 1,600 crores, comprising of orders from -- of supply of our hardware and ports.
In Afghanistan, we have realized further collections of INR 220 crores to the date in FY '24. With this, the total collections received in the last 2 quarters stand at over INR 260 crores. We are in active discussions with the multilateral funding agencies for collection of the balance receivables and are confident of realizing the balance in the coming quarters.
Coming on to the financial performance for Q1, we have delivered a robust revenue growth of 28% for the quarter with revenues up INR 4,244 crores. This growth is backed by healthy execution in both T&D and our Civil business. We also achieved an interesting growth in EBITDA of 45% with a consolidated EBITDA margin of 5.8% for the quarter. We are -- however, witnessing a shift in our margin profile with significant improvement in revenues and margins of our UAE subsidiaries, SAE and [indiscernible]. The margins for the stand-alone are slightly lower, owing to the mix of projects under execution during the quarter.
We have also increased our bottom line significantly with PBT growth of 26% and PAT growth of 36%. We continue to witness an uptake in order intake. Along with our Q1 results, we have also announced new order wins of INR 1,065 crores yesterday. These include orders in the T&D and Civil business. With this, our YTD order intake stands at INR 4,500 crores, a staggering growth of 30% vis-a-vis last year. The largest contributor in our YTD order intake has been India T&D and Civil businesses followed by Railways and Cables.
We now have a well-diversified and strong order book of INR 30,125 crores as on 30 June '23, a robust growth of 27% vis-a-vis last year. Additionally, we have an L1 position of over INR 5,000 crores diversified across businesses. With this, our order book plus L1 position stands at a record level of over INR 35,000 crores, which is more or less equally divided between T&D and the non-T&D businesses.
We continue to focus on working capital and have brought down our net working capital by 22 days to 126 days as on 30 June '23, vis-a-vis 148 days as of 30 June '22. Our net debt, including acceptances have reduced by more than INR 350 crores and stand at INR 5,714 crores as on 30 June '23, despite a revenue growth of 25% in the trailing 12 months. The interest cost, however, stands at 3.7% of revenue going to the steep increase in the interest rates.
Now coming to the specific businesses. Our T&D business has achieved revenues of INR 2,188 crores with a significant growth of 33% vis-a-vis Q1 last year. The growth has been delivered on the back of robust execution across both domestic and international markets. In terms of order intake, the business continuously witnessed traction with a standout growth of 50% and new orders of over INR 1,800 crores across India, Middle East, Africa, Europe, Americas. We are pleased to share that the business has secured a prestigious repeat orders from private developers and another order from a reputed power generating client.
In a significant achievement, the business has secured its maiden power supply order from Europe, which is our testament to our dilutive focus on increasing the power sale business and diversifying it geographically. We have also secured our second power supply order from the U.S. market. The overall tender pipeline in T&D continues to be strong both in domestic and international markets.
In India, the power sector is poised for promising growth with transmission infrastructure planned for major renewable energy potential zones such as Rajasthan, Gujarat, Andhra Pradesh and Tamil Nadu to support the target of achieving 500 gigawatt of non-fossil fuel power by 2030. We have already secured some of these orders in the T&D segment. We have also increased our focus on the renewable energy segment, especially Solar. In international, we continue to witness opportunities in the Middle East, SAARC and the CIS region. With a record order book and L1 in T&D of INR 18,000 crores and an increase in tendering activities across regions, the business is expected to gain further momentum.
Coming to Railways. The Railway business has clocked a revenue of INR 764 crores for the quarter with the growth of 8% vis-a-vis Q1 last year. The business has also secured orders of INR 750 crores, strong growth of over 80% vis-a-vis last year. In a significant development, the business has successfully expanded into the international market with its order for a signaling and telecommunication project in Bangladesh.
In line with the government's focus on increasing capacity, speed and safety of the Indian railway network, the business has folded into the emerging segment of Automatic Blocks Signaling, ABS to increase line capacity through automation and thereby strengthen its presence in the promising speed upgradation segment. With increased thrust of the government on strengthening the infrastructure, we expect some large opportunities in the areas of signaling and telecommunication, speed upgradation, TCAS under KAVACH and Automatic Box Signaling. We also continue to focus on the international market.
Our Civil business continues to be a high-growth trajectory as it delivered revenues of over INR 950 crores, a splendid growth of 60% vis-a-vis Q1 last year. The growth has been delivered by a robust execution across all segments, especially industrial, urban infra, water and residential. During the quarter, the business has strengthened its order book with multiple orders of INR 1,370 crores in the industrial, residential and commercial building segments from [indiscernible] clients. The business has also widened its presence by securing composite orders, including mechanical, electric and plumbing works, MEP.
The data center industry in India is witnessing unprecedented development and is one of the fast-paced growth sectors. It is estimated that there will be an additional over 800-megawatt capacity by 2024 with an investment of USD 5.5 billion in setting up data center facilities. We are currenty executing 4 data center projects and are confident of growing this segment significantly. With a robust and diversified order book and L1 of over INR 11,000 crores, the Civil business is confident of leveraging upcoming growth opportunities through its diversified presence across sectors and stock strong project management and execution capabilities.
In Oil & Gas pipelines, the business has delivered revenues of INR 104 crores, a growth of 13% vis-a-vis last quarter. The business continues to focus on building required prequalifications to increase the size of the addressable market. The business has a strong order book and L1 of INR 1,000 crores, comprising government and private players. We are confident of scaling up this business in the coming years.
Our Cables business and actual revenues of INR 389 crores. During the quarter, we have launched a large transformation program for improving profitability with a global management consultant. The business has successfully ramped up the PVC plant to produce 500 metric tons of various grades, thereby leading to a significant cost advantage and better control on the supply chain. The business is also progressing well with the development of additional new products and is on track to commercialize them this year.
In ESG, we continue to embed industry leading practices across our operations, factories and project sites. In line with our strategy to make all our manufacturing plants water positive. We are pleased to share that our Nagpur plant recently received water positive certificate for promoting water conservation. Our efforts have led to the company generating 16% more water credits than debits.
In conclusion, we are pleased that with our consistent growth in revenues, traction order intake and improving trajectory of profitability. The outlook remains healthy across most of our businesses with the current tender pipeline of over INR 1,00,000 crores. With a robust order book plus L1 and strong focus on execution, we are confident of delivering the revenues of over INR 20,000 crores with EBITDA margins of 7% for the year.
Thank you. I am now open to questions.
[Operator Instructions] First question is from the line of Ashish from GM Financial.
So my first question is on the India T&D prospects. I mean, we have seen some amount of traction picking up. So if you can specifically tell us how is the order bid pipeline at this point of time for the India T&D? Is there any number you like to reverse with what is the kind of inflow we expect in that business this year?
In India T&D, we are suddenly seeing a lot of traction. I think there is some change somewhere in the government thinking saying that, notwithstanding what is happening or, let's say, some delays in solar and et cetera. We have now said that since transmission line takes for 2 years, 2.5 years to erect or construct [indiscernible] a solar in 1 year. They have now started going ahead with lines even if the solar and all are slightly, I'll say slightly behind, okay?
But if you want to take some numbers probably between PGCIL, [ SPB ] and private, we are seeing somewhere around a tender pipeline today of around INR 20,000 crores or so in the, let's say, in the coming quarter or quarter 2. That's the number, which are there today.
Okay. And what's the kind of share that we'll expect this year? And basically, what kind of competitive intensity, how many players are bidding today? And what's our fair share we'll expect out of this, let's say INR 20,000 crores, INR 25,000 crores?
So Ashish typically., We have been getting between 10%, 12% or 15%, 16%. So 1 out of 6 is what typically we see, okay? That's a typical one.
Competition, I'll say, in transmission line is maybe for larger projects, it would be 4 or 5 players. Subscriptions, where we are actually getting a lot of orders in subscriptions than in transmission incidentally, it is maybe 3 or 4 people for the larger ones, especially the GIS ones. If it's AIS one, then the numbers are much, much larger and maybe 7 or 8 players, but GIS, it's 3 or 4 players.
Got that, sir. One last thing. On the Dubai business, we have mentioned that it's been ramping up well. If you can give us the revenue and EBITDA that we have done in UAE business for this quarter?
I don't think I have the exact number, but it would be, I think, somewhere round INR 700 crores, INR 800 crores of revenue between the 2 subsidiaries in Dubai. If you look at the annual numbers, Dubai plant should be around INR 500 crores also, between INR 400 crores to INR 500 crores, because the capacity is around 50,000 tons, if you take an average realization of 1,00,000. I said between INR 400 crores to INR 500 crores would be the full revenue potential of the plant.
And on the EPC, it depends upon how many orders we are able to exhibit and what do we do. But I think typically, I think this quarter was -- I don't have the exact numbers, but that's what we will achieve.
And what's the kind of margin the Dubai plant makes, sir?
So right now, the margins are better than other places, because of the fall in the steel prices because these orders have been booked and steel has been showing a beneficial trend. So I think it would be close to double digit or something or maybe 100 basis points here or there, but it's broadly around that side.
[Operator Instructions] The next question is from the line of Vivek from DSP Mutual Fund.
Congratulations on an excellent performance. On the stand-alone EBITDA, you had said that there was a product mix that caused lower EBITDA. Which part of the product mix in terms of revenue has caused the lower EBITDA? And you expect it to normalize in the current year? It is question number one. I mean, in the later quarters.
And secondly, especially on working capital, there's been tremendous improvement. You had some kind of wobbles in the railway collections. Has that improved? Those are my 2 questions, sir.
So the railway collection wobble still continue. Let me be very, very clear on that. I think that's still not normalized partly. Our issues where we have not been able to build it properly or complete the project as per the commercial terms and partly on account of delays, okay?
As far as the India as a standalone business is concerned, I think what we have said is that the project mix was an issue because we are all -- we've been discussing the legacy projects for a long time. So we have been able to book a large part of -- I'll say the losses in those projects during the quarter. And depending upon how they progress, probably they should get hopefully closed by Q2. So I think by Q3, we will start seeing a bump up in the stand-alone margins.
Next question is from the line of Riya Mehta from Aequitas Investments.
My first question is in regards to international T&D. What kind of [indiscernible] you're seeing? So what kind of opportunities are you seeing there?
So as far as Middle East is concerned, the maximum, I'll say, tenders are coming in from Saudi, a few from UAE and a few of our Oman. But largely, it's a Saudi focused market. And the second piece, as I answered the first question is that we are seeing a lot of inquiries for power supplies from our Dubai plant. So typically, I think our revenues in Middle East should be close to INR 1,000 crores or maybe it's more than that for this year.
SAARC, we are seeing opportunity restricted 2 countries, basically Nepal and Bangladesh. Of late with the current situation of Bangladesh, there is a little bit less. But I think Nepal suddenly seems to have an upgrade with orders or tenders. So get funding from all over the place from Government of India, CFW and [ Millennium ] Corporation U.S. So we have seen a large number of tenders, which have come out in Nepal. And I think, hopefully, by Q2 or Q3, many of them would be quoted and decided. So we should hopefully see a lot more orders coming out of this country. Bangladesh, also, there are some tenders, but of late, it's a little bit less, but I think it is a matter of time because the requirement is large. So those tenders will also come up.
Also in Civil, you said that you're seeing investments in water pipeline. So which markets are we seeing this exactly?
So this -- if you ask me the segment, it is that [indiscernible] where you are -- we're supplying water, building tanks, water purification plants, et cetera, and supplying to villages. So right now, we are in 2 states in Odisha and MP. And we have an order book of close to INR 4,000 crores in this segment.
Got it. And in term of Oil & Gas pipeline, could you give your outlook on that?
That business has been a little bit subdued in that sense, because the number of orders and what we were expecting tenders had not come in earlier, but now we are seeing some tenders coming out. We are already involved in to 2 tenders. And I think a few more are coming out. But it's been in a way lower than what we had thought, okay? But I think the government is now again talking about the gas grid. So hopefully, some more tenders will come out.
Okay. I think ONGC and all this are coming up with a tender in December now.
Yes, yes. Let's hope for the best.
Next question is from the line of Bhoomika Nair from DAM Capital Advisors.
The first question, in T&D, you spoke about some INR 25,000-odd crores of ordering that could possibly happen this year. Just wanted to understand how is competition kind of behaving in this space of, given that there is a decent amount of traction? Are you seeing much more players of the same size of players, who typically win a lot of the orders more impact kind of scaling up?
So typically, Bhoomika for the smaller orders and for smaller T&D, where the prequalifications are pretty relaxed and also for AIS substations. So there, we are seeing a lot of competition, I would say, 6, 7, maybe 8, 9 players also coming in. But if you look at the larger orders, where there is a requirement for specialized conductors and 765 lines, et cetera, and also the larger GIS like last year we got 2 digital GIS. So there were hardly maybe, I think, 2 or 3 players, who are able to offer those products.
So for the larger ones with much more, I'll say, complex requirements, the competition is fairly limited, maybe 3 to 4 players. But on the normal ones, it's [indiscernible], you have 7, 8, 9 players coming in.
Okay. Okay. So I mean, are there bid margins still like double-digit kind of levels now or have they trended up, trended down? I mean, how is the trajectory out there in terms of the bid margins?
So I said, typically, the bid margins have started to trend up. [Foreign Language] but the margins have started to trend up very clearly.
Okay. Sir, the other thing is in Civil, obviously, we've seen a huge amount of traction in the last couple of years, and we scaled up our own offerings, et cetera, out there. Obviously, your -- there's a lot of CapEx that's happening, a lot of activity that's happening. Where do you see the order inflow for this segment in the current year and the kind of revenues that grow or that we could possibly see out there?
Yes. So remember, last time also we talked about it saying which sectors and all that. So I think one is clearly the real estate. The residential piece is doing very well, okay? That's actually the biggest market which we are seeing. Second one is on commercial. Surprisingly, we started seeing a lot of inquiries on the commercial side, both offices as well as shopping malls, et cetera, okay? So that's -- I'll say in the residential and commercial. On the industrial, we continue to see a lot of things from metals and mining, okay? Whether it is steel, whether it is aluminum, zinc. So we have continuous inquiries are coming from metals and mining.
Of late, we got a couple of inquiries from FMCGs, which we're not there at all, but now we started receiving, so I don't know whether the demand is picking up, what is happening, but we are seeing inquiries from FMCG.
Then also from data centers, as we talked about. I think broadly, those are the areas where we can see and water is continuing in any case, okay? Not too much on urban infra, okay? So there seems to be some slight slowdown at least in the sectors in which we are operating. I think broadly, that's the part of Civil.
Okay. And so, what kind of intake we could see this year from this segment?
So overall, for Civil, our target is around INR 8,000 crores or so, okay? For order intake out of the INR 25,000 crores, which we have for the whole company, we expect that Civil should do INR 8,000 crores, maybe more, but that target is INR 8,000 crores.
Okay. Okay. Sir, you're in Civil, just on the margin profile, we used to be at around 5-odd percent, 6% kind of margin some time back. With this increase in terms of -- that had very low working capital commentary. How is this now kind of turning, I mean, residential effects are coming up more, are you seeing working capital going up and margins trending up? If you can just comment on both these aspects of the segment?
So working capital, Bhoomika is more involved in your urban infra and all that. okay? Residential, industrial and all that. Typically, the working capital requirements are very low. So I think if you look at historically, what used to happen is that you had very small contractors, who did not have their own cash flows, et cetera. So somewhere the way the Civil business is structured, especially the residential and industrial, the payment cycles are, I'll say, pretty good when I look at T&D and railways and all that, okay?
So the working capital cycle remains fairly, I'll say, benevolent for us in terms of Civil. Margins have been trending upwards. Obviously, they are not still at double digit and all that. But they are slowly trending to, hopefully, it should be higher single digits, sorry, but it is trending upwards. It's not at 5%, 6% now.
Next question is from the line of Nikhil Kanodia from HDFC Securities.
Congratulations on the robust order book that you have at the record [indiscernible]. So I had 2 set of questions. So 1 set is regarding your standalone [indiscernible] margins and the other set of questions would be regarding your debt numbers.
So on the quarter-on-quarter basis, your debt has kind of increased by INR 700 crores. So any light as to like what would be the reason? And the guidance for the year-end debt numbers? Like are we expecting any reduction or any addition in the debt numbers?
Nikhil, Q-on-Q, first quarter over Q4 is always a phenomenon, if you look at historically also. The Q4 debt is always lower and Q1 has always been higher, okay, which is why we have been -- because of the seasonality of this, we have always been comparing year-on-year rather than Q-on-Q at least in our business. So I think that's why I don't read too much in the fact that the debt number has gone up Q-on-Q, okay? And also that, that was 26% increase in revenue, which we have had. So there will be an impact of that.
Overall, for the year, I don't expect too much reduction in the debt as such, because we've been talking about revenue going up from the current INR 17,000 crore to INR 20,000 crore plus. So a part of debt would be required to fund that revenue increase. So although I don't see the debt going up, I don't see it coming down significantly, okay?
However, what can also happen is that the net working capital, which is at today, 126 or 128 days, again probably our target is to bring it down to 110 days at the end of the year. So hopefully, there should be a reduction. Also, I think it looks like that we reached a peak of the interest rate cycle. So maybe somewhere we may see some reduction happening today, like interest rate average has been 7.7% versus 4.4% or 4.5% in the corresponding quarter. So it's almost like a 100% sort of rate increase has happened. But now it's peak. So I think interest should start coming down as a percentage of revenue.
Raj, do you want to add anything to this?
No, I think you have answered it well. So effectively, what we should look at is the NWC. NWC has been constantly coming down. It was at 148 days, now it has been brought down to 126 days. Despite 25% increase, if you look at the last 4 quarters, there has been a corresponding increase of 25%, 26% in terms of volume and it's substantial number in the absolute terms. And also, we are seeing now we are targeting 110 days. So that is -- so we are going back to what we used to be. Let's say, '19 -- 2019, 2020, we were at about 100 days or so. So we are actually trying to go there to 100 days of NWC. And definitely, we are quite confident that we should achieve 110 days target by end of this fiscal.
Sir, just to clarify, you said the average rate is 7.7% versus 4.5% in the similar quarter of the last year, right?
Yes.
Okay. And sir, what would be your order inflow guidance for the year?
So as we said that our target has been around INR 25,000 crores. So we have now announced INR 4,500 crore, so around INR 20,000-plus crore should be the balance in three quarters.
Okay. Okay. Understood. And sir, on the margins front, so we have seen some margin improvement on the channel, and you mentioned that from Q3 onwards, we could witness some bump up margins at the standalone level. So any guidance as to like when can we expect a double-digit kind of a margin at [indiscernible] levels?
Double digit right now, it looks difficult to predict exactly when it will happen. But our guidance for the year has been that H1 would be at 6% and H2 at 8% and overall 7%, okay? Let's wait for some more time to see exactly when we can reach double digit. But yes, we are slowly heading towards improving the margins.
And sir, what the standalone margin guidance for the year would be?
I don't think we have separate margins for stand-alone and [indiscernible] We've still [indiscernible].
Okay. Okay. And sir, one thing that I could see -- this is my last question. The fact at the channel level was at the lowest levels. So any measures that we are taken to improve the bottom line?
So I think as I said that earlier, because of the mix of the projects and execution of legacy projects, the PAT was [indiscernible]. And also, obviously, the interest cost was high. So we -- also, I think let me put one thing, which we have not discussed earlier is that, we are seeing some strength on the supply chain in the transmission and substation where items like conductors and transformers, et cetera, are having an impact on the top line, actually the revenue growth. So I think slowly, these things are coming into place. So once that happens, to me it is a function of margin is going to depend upon the revenues, okay?
So as soon as we are able to push more revenues, it will happen. That's why I said Q3 because Q2 clearly with -- its a monsoon quarter in India. And also this year, I think the monsoons have been pretty bad. In fact, the July has been sort of washed out in many parts of the country. So I think from Q3 onwards, we should be able to improve on all the fronts.
[Operator Instructions] Next question is from the line of Sai from Kotak Securities.
Yes. So my first question is the recent CEA National Committee agenda shows a pipeline of 7 [indiscernible] in transmission and power distribution segment. And while it doesn't comment on the expected time line for the same of when it would commence, how can we expect these projects to be awarded usually? What time can we expect since the number is too big? And how are we expecting to plan a capital expenditure on the same ahead?
Typically, Sai, what we have seen is I have not [indiscernible], but typically, it's about INR 1,00,000 crores of projects come out every year. That's the way it happens, okay? So INR 1,00,000 crores mean, if you take -- typically, [indiscernible] take a time origin of 5 years. So if you divide it by that, then it would be INR 140,000 crores, okay?
But I can tell you one thing is that we are seeing a lot more traction than before at least on the larger projects linked to green energy, okay? And especially between, I'd say, Gujarat and Rajasthan. Those are the 2 states where we are seeing a huge amount of projects being announced and as you are aware, government and especially on the wind and solar has allocated large capacities to the PSUs, whether it's NTPC or [indiscernible] or [indiscernible] or GIPCL. And those large projects are coming up.
Now -- and looking at what is happening on the write-off way, et cetera, what government is also doing on the transmission all that they are actually setting up a very large project, 765, double circuit and all which are not required today. But I think they don't -- they want to avoid the problems which they will see in future. So it's happening more like Middle East now where you are building a lot of capacity. I think that's real.
But again, coming back to a question, maybe INR 1 lakh crore to INR 140,000 crores annually could be the number on the entire spend.
Okay. And the kind of CapEx we are expecting?
I don't -- what do you mean by that?
I mean the capital expenditure that we are expecting for the same pattern for the projects that are going to come up?
I don't have a specific number for that. No.
And also, as you mentioned, these projects, particularly in Gujarat and Rajasthan, they are more of a renewable team there and given KEC also undertakes solar projects, what can we expect on the same?
So Solar, we are doing 1 large project right now in Karnataka. It's a 600-megawatt project. We have started bidding for a few more -- very selectively, especially where there are no modules. We don't like to take module risk. So -- but off late, I think the developers have understood that, that they don't get good increases with that. So most of the large projects now, especially from the public PSUs are coming without module. So we have recently put in bids for 1 or 2 of them. And I think in the next month or 2, we'll be bidding for another I say 2 or 3 large solar projects.
Next question is from the line of Subhadip from Nuvama Wealth.
So my question is with regard to the [ EPC ] pipeline that we are seeing on the T&D side of things. I think the NCD has recently approved close to INR 70,000 crores worth of projects, which will be probably get tendered out over the next few months, which also includes 1 large HVDC project. So with the quantum of projects that we're seeing coming up on the 765 side or on the HVDC side, do you see KEC having an edge in terms of, let's say, winning some of these EPC orders? And also, again, the size of the project is larger, there are a limited number of bidders and we see margins also trending upwards.
Broadly, I'll say yes. Broadly, I think very clearly, if you look at the results of 765 and other projects. In fact, we are the only EPC company which is doing an HVDC project on the converter stations side. On transmission line, there are a few others also would do it, but on the substation side, we are on the only, who is doing, apart from obviously the OEMs who do it themselves.
So clearly, you're right that the competition is limited, but capability is limited. So the business will definitely grow up margins. I don't know how much it will go up. But as I said earlier, also the margins are tending to improve, okay? Very clearly, we are seeing those things happening. The other thing is [indiscernible] that these projects are now coming with a shorter time line, okay? Some of them are 12 months, some of them are 15 months. Max, I have seen a couple of projects over 18 months.
So because of which your working capital will also start improving once you have a shorter cycle projects, which is if you look at the current EPC projects, which have been awarded both by private and [indiscernible] we have [indiscernible] projects from both power grid as well as at least 2 or 3 private sector or [ TBCB ] developers. And some of the projects are at least the last one, which I took as our 10-month project.
So I think that is another thing which will help in hopefully improving our working capital as Rajeev was talking about in reducing the NWC and all that would also come about from these projects.
Understood. That is very helpful. And lastly, while you have given us a guidance with regard to, let's say, our FY '24 revenue and the margins. On FY '25, would you hazard a guess in terms of the targeted top line and hopefully nearing to those double-digit kind of margins?
I think it's a bit early for that. But let me put it this way that we have a INR 35,000 crores order book plus L1, okay? So I think as far as the top line is concerned, we are, I think, I'd say, reasonably well placed. Number may be a bit early to say, okay? But I think we'll have a decent number. I can only say that. Margins, again, I am still not hazard a guess right now, okay? But very clearly, the project mix is improving significantly. All [ orders ] are getting over. And I think hopefully, as I said, by Q2, we should be able to get out of almost all the legacy orders. So the margins will start improving. Whether they will touch double digit or not is a matter of conjecture today, okay?
Our aspiration is that it touches double digit next year, but whether we'll be able to do it or not is something which will depend upon how the metal prices and how the execution pans out, okay? But I think it should be significantly improved, I can say that much.
Next question is from the line of [indiscernible] from [indiscernible] Securities.
Sir, we mentioned the collections were INR 260 crores from Afghanistan in the past 2 quarters. What's the balance amount? And when do we expect to receive?
So I think that the net, as far our [indiscernible] INR 260 crores, which we expect to receive. I have said that in the next few quarters, we should be able to receive and that's what we have been earlier also mentioning by the end of this year, we should get the money. So the money has to come from multilaterals. So it's very difficult to [indiscernible] actual time lines. But based on our discussions with them, we do expect that by year-end, we should get the balance money.
Okay. Secondly, have you managed to completely execute the legacy projects in Brazil? Or there is still some [indiscernible] lift? Can we expect the full [indiscernible] to be PBT positive for Brazil?
So as far as the legacy projects are concerned, we had completed them, I think, in Q3 last year, okay? So since -- so last 2 quarters, we have had no EPC projects. All of them are what we call supply projects, okay? Brazil is EBITDA positive. As I said, SAE is PBT positive. Projects still have a very marginal, I think, negative PBT, but now that a large part of the loan has been restructured. My view is that from maybe Q2 itself, we should be PBT positive in Brazil also, although it by itself will become PBT positive this quarter.
[Operator Instructions] Next question is from the line of Anupam Goswami from Star Union Dai-ichi.
Sir you mentioned about your revenue target, which is about INR 24,000 crores. Where do you see the proportion of H1 and H2, given there's a little -- you mentioned about a little subdued demand in the Q2. How do we see the H2 compared to H1?
So we're talking about INR 20,000 crores, I don't know, I have not talked about INR 24,000 crores.
Okay. That's my mistake. Okay.
And typically, what we have seen is H1 is 40%, H2 is 60%, typically that's the way it always happens. This year, because of range, maybe a couple of percentage points here and there, may be 37%, 38%, but typically, it's around 40% and 60%, okay? Generally if you look at it in different fashion. It's first 3 quarters is 20% and the last quarter, it's 40%. That's the way for the other 2, I'll say, numbers way we look at it, okay?
Okay. And sir, in your margins, are you seeing that in your, let's say, FY '18 or '19, there has been a good margin growth. And one thing was there that T&D revenue mix was also pretty high in the mix. So where are we heading in the margins? Do we see T&D mix more coming in the revenue and margin also improving? Or is it like too much of a competition and we are not gaining that margin profile, what we used to earlier?
So to me, Anupam, P&D margins based on my account of 2 things. One was obviously because of COVID, the business has come down and second was because of the war, Russia and Ukraine conflict. So I think to me, what is happening is that because of the -- as I said, the Russia-Ukraine conflict, the metals went up significantly. So the major reason for the reduction in the margins had been the delay on account of COVID and also the, I'll say, very unusual increase in the metal prices over a very long period, okay?
Now to me, the metal prices have stabilized significantly, COVID has subsided, so the execution is improving. So clearly, we are seeing that the T&D margins should start getting back to the normal levels.
When do we see the T&D margins?
I think these will start becoming normal from Q3 onwards is what we have talked about.
Can we expect about 11%, 12% in that?
I don't think, we've ever talked about 11%, 12% margins in this business, okay. As reminder, we did say 10%, 10.5%, but I think that was 2 years [indiscernible] from now, if we can do [ leverage ], we'll be very happy.
[Operator Instructions] Next question is from the line of Rahil Shah from Crown Capital Partners.
So just one question. In your exports business, so what is the contribution right now? The revenues?
So our outside India business is overall around 37%.
And what part of it is from non-T&D?
Right now, it's 100% T&D.
100% T&D. So do you expect like non-T&D orders to be there [indiscernible]?
I just announced the Railway has got our first order in Bangladesh. Civil has been quoting. Oil & Gas has been looking at it. So clearly, the business of the other verticals will definitely start increasing, okay? And the other piece is that the India T&D is improving. So we obviously not provide what the ratios will be, and we don't have a target for the ratios, depends upon which business does.
But clearly, I think the absolute value of interaction business will definitely go up. SAE is doing very well. As I said, Middle East is doing very well. So the numbers in the T&D as well as Railway and Civil will go up internationally. But I think India is doing also very well. So whether the ratios will change or not, I do not know. Because India T&D is doing well. Civil is growing at 60% and all that. So the India revenues are going up significantly faster.
And just lastly confirming, you said net working capital days, like target is 110, right, for the year?
Yes, yes. You're right.
Next question is from the line of Uttam Srimal from Axis Securities.
Congratulations on good set of numbers. Sir, my question pertains to interest cost. So we have incurred around [ INR 159 crores ] this quarter. So this run rate will go for the remaining 3 quarters also? Or we expect some reduction in the interest cost going ahead?
See our interest cost is by and large similar to what it was in quarter 4. And reason as Vimal explained in his opening remarks, is that basically the interest cost has gone up from -- RBI front-loaded the entire interest rate hike. And in the last 1 year, the RBI has hiked interest rate by almost 2.5%. So since our majority or, in fact, the entire amount is towards working capital, that transmission was immediate, because all the bank borrowing and the market interest rates went up immediately on the hike announced by that is the [indiscernible] Bank of India.
So the entire hike has been captured in this quarter 4 and quarter 1. More or less, our volume of borrowing has come down. In fact, if you look at last -- quarter 1 versus quarter 1 of last year, borrowings have come down by almost INR 350 crores. And so the entire impact is basically on account of the interest rate. We do expect that these interest rates are unlikely to go down what it looks like with the U.S. Fed hiking the interest rates recently and they're talking about more hike. We are only hoping that RBI don't need to increase the interest rate further. So that will -- we expect that by and large the interest rate will remain for the current year.
Obviously, we are making a lot of efforts in terms of controlling our borrowings and bringing down the borrowing with that revenue growth of 15% to 20%, what we have guided for the year-end. I think there will be some reduction in the borrowing and that will lead to some reduction on the overall interest rates -- overall interest cost.
Okay. Okay. And sir, with regard to water projects, what kind of margins are there in the water for this year that we are currently executing?
Difficult to give a specific answer because the margins depend upon the size of the project and different values. But they would be between, I would say, between 8% to 10%.
Next question is from the line of Ashish from GM Financial.
Sir, my question is on the Afghanistan net receivables. So that number seems to have gone up from the March quarter to the June quarter. So have you been doing any incremental work there or that's because of the reduction in the payables?
Actually the second part is the reduction in the payables and liabilities.
Okay. So there's no incremental buildup on the receivables, but we have some of the liabilities.
We are not doing any work there, no.
Right. Sir, secondly, we did talk about KAVACH as one opportunity. So is there any quantification of that opportunity at this point of time? I mean, what it means for KEC as a company for our scope of the work in that particular area?
So typically, our scope of work is around 30%, 40% of our contract value, whatever we get. So we have got 2 contracts. So it's not very significant as of now. Because I think as far as I remember, until now around INR 1,600 crores of tenders have come in, and we have got 2 of them. Another, I think, INR 2,500 crores or so are in the pipelines. This entire KAVACH plan, which I have seen at least talk about around INR 25,000 crores of orders coming over, I don't know how long it will take, but it's getting a bit expedited after the unfortunate accident, okay?
Opportunity-wise, I don't see more than INR 500 crores, INR 600 crores for this year. But if the government accelerates it, okay, then the numbers can go up, okay? But in a best year, maybe INR 1,000 crores or so, if it happens. It's not a very big opportunity, but it's an opportunity where the number of players are less. So hopefully, the margins can be better also.
Next question is from the line of Nikhil Kanodia from HDFC Securities.
Just one clarification that I wanted is the yesterday's press release of INR 1,065 crores of order into that is included in the year-to-date order inflow, right?
The order inflow of INR 4,500 crores, but not in the order book. Order book was as on 30 June -- order inflow of INR 4,500 crores is Y-to-date -- year-to-date.
Okay. So that includes the yesterday's orders?
Yes, yes, yes.
[Operator Instructions] Next question is from the line of Sagar Didwania from ICICI Bank.
So my one question is regarding with the stand-alone business. So year-on-year basis, there is a decline from [ 100 CR ], [indiscernible]. And on the consolidated basis, that is a marginal improvement. So can you just bridge the gap between that -- the loan and consolidated numbers?
So Sagar, as I said in my opening remarks, it's basically the project mix, which has impacted in the last quarter when I say, Q1 of FY '23. We had a very large profitable project, okay, where the large revenues came in, in that quarter. This quarter, that project, the revenues are very less because the project is now coming to an end. Also, we had a few legacy projects where we had metal exposures, et cetera, which have all been hedged and booked plus I'll say a couple of large legacy projects have got completed and the claims are getting settled. So based on that, whatever is the impact, has been considered in the books.
Next question is from the line of Vishal Periwal from IDBI Capital.
Sir, one question on the KAVACH. So in terms of opportunity side, you did mention, but how is actually the bidding happened? Is it like a [indiscernible] per we bid or the equipment player bid and then we get the order?
So it's in a -- I don't know whether it's a JV or a consortium, but it's a joint bid, okay? Where the bids have been done together.
Okay. So currently, can you share like how many players are there? And are tie-ups is within Kernex or [indiscernible]?
So as of now, we have bid with Kernex for the 2 projects. And as far as I know that there are 3 approved players under RDSO for the KAVACH and there are, I think, 2 or 3 more which are under approval, okay? So hopefully, if the approval comes through, then you'll have around 5 OEMs, 5 or 6 OEMs in KAVACH.
Okay. And one clarification. So out of this INR 25,000 crores or INR 30,000 crore opportunity for EPC players, the split is 40% and for equipment [indiscernible] to 60%. [indiscernible]?
It depends upon what happens, okay? We can always do more also or less. So it's on an order-to-order basis then, who has got the financial capability to do more, et cetera. So difficult to say, but right now, 40%, I think you can safely assume as a system integrator role, okay? And 50%, 60% would be the equipment supply. That's a broad thing. But I think with the number of players and the sizes increasing, these ratios can actually undergo a change.
As there are no further questions, I would now like to hand the conference over to Mr. Vimal Kejriwal for closing comments.
I think, thank you, everyone, for your continued interest in KEC. Thanks a lot. Thank you.
Thank you very much. On behalf of KEC International, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.